The market for bank stocks found a pretty unconventional reason for its latest case of the jitters.

On Tuesday investors were in a lather over a report that a candidate for Argentina's presidency said he would ask the Pope to urge a one-year moratorium on debt payments for cash-strapped emerging nations.

The market reaction was swift and sharp. The S&P 500 index declined 0.4% on Tuesday, but big banks with extensive activities in Latin America bore the brunt of investor displeasure.

"People hear Argentina, they hear debt and they have the perception that we're back in the 1980s again, when we're not," said Stephen Biggar, a banking analyst at the Standard & Poor's equity group.

Citigroup was the biggest loser, with its stock dropping 2.31%, to $47.625. J.P. Morgan & Co. declined 1.65%, to $138.25, and Bank of America Corp. fell 1.09%, to $73.8125. Chase Manhattan Corp. was down 1.56%, to $82.8125.

"We're in a sloppy market," said Carole Berger, principal at Berger, Jackson Inc. of New York. "I can't point to any one reason that's making the market act this way."

Ms. Berger said she could see why larger banks stocks would react to the reports from Latin America, but said she did not know why sharp declines were hitting regional banks that have no exposure to the region.

PNC Bank Corp. fell 2.21%, to $55.3125, and State Street Corp. 2.25% to $81.625.

The Standard & Poor's bank index shed 1.05%, and the Dow Jones industrial average 0.23%. The Nasdaq bank index lost 0.68%.

"It's not been my kind of market," said David Ellison, manager of two bank funds at Friedman, Billings, Ramsey & Co. of Arlington, Va.

"It's shaping up that if banks miss their numbers they're penalized, and if they hit their numbers the stocks do nothing, or go down," Mr. Ellison said.

In this kind of market, "you stick with names you know, with their earnings outlook and what kind of vision they have," Mr. Ellison said.

The market was also concerned about whether economic data to be released this week will prompt the Federal Reserve to consider boosting rates at its Aug. 24 meeting.

Retail sales results for June, the producer production index, and the consumer price index will all be announced.

The data could point to a moderation of consumption, the disappearance of inflationary issues, an increase in business inventories, and decent industrial production, all of which bode well for the economy, said Joseph Battipaglia, chairman of investment policy for Gruntal & Co. But no one knows.

For the year, Gruntal & Co. is looking for economic growth of 3% and a 15% growth in corporate profits on a quarter-to-quarter basis.

This is also the week that banks begin reporting earnings and some banks are already feeling strained by lackluster results.

F&M Bancorp was downgraded Tuesday to "market perform" from market "outperform" by Ferris, Baker, Watts Inc. of Baltimore.

The stock fell 20 cents, to $31.375.

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